The company's 1Q24 gross margin fell 8.69pct month-on-month, and gross margin was under pressure in the short term. In '23, the company achieved revenue of 3.66 billion yuan (YoY +35.4%), net profit of 890 million yuan (YoY +16.3%), of which 4Q23 revenue was 1.04 billion yuan (YoY +25.6%, QoQ +12.2%), net profit after non-return to mother was 260 million yuan (YoY +18.0%, QoQ +16.9%), gross profit margin of 40.5% (YoY+1.9pct, QoQ+3.9pct), and cost optimization led to 4Q23 gross margin improvement; entering 1Q24, the company's revenue 805 million yuan (YoY +3.2%, QoQ -22.9%), net profit after deducting non-attributable net profit of 162 million yuan (YoY -18.6%, QoQ -36.8%). Affected by intense downstream competition for photovoltaics and new energy vehicles and price competition with peers, the company's product price adjustments, 1Q gross margin fell by 31.78% (YoY-4.64pct, QoQ-8.69pct).
The company's IGBT module shipments in the new energy industry are growing steadily. The company's revenue in the new energy industry in '23 was 2.16 billion yuan (YoY +48.09%). Despite product price adjustments due to increased downstream competition in 1Q24, the company's shipments and product types continued to be optimized: in the field of photovoltaic power generation, compared with 1H23, the share of the company's IGBT modules in terrestrial power plants, large-scale energy storage, and overseas power plants such as North America increased rapidly, 1200V/650V high-current single-tube mass application, and photovoltaic product structure optimization; in the field of new energy vehicles, the company supplied more than 2 million sets of NEV main motor controllers throughout the year and obtained A number of domestic and overseas manufacturers agree on points.
Star Europe's revenue increased by more than 200% year on year, and automotive-regulated IGBTs have been delivered in batches to Tier 1 European brands.
Star Europe's revenue for 23 years was 310 million yuan (YoY +227%), an increase of 2.3 pct compared to 1H23; Fistar Europe's overseas revenue was 77 million yuan (+70.88%); overseas gross margin reached 42.66%, which is better than in Asia; in the future, it is expected that the average gross margin will gradually improve as Star's overseas revenue gradually increases. In addition, in '23, the company's automotive IGBT modules were delivered in large quantities at the European first-tier brand Tier 1, and several new IGBT/SiC MOSFET main drive projects have been targeted, and overseas NEV revenue is growing rapidly.
Automotive-grade SiC MOSFET modules accelerate start-up. In '23, the company's new energy vehicle silicon carbide main drive modules have been loaded and applied in large quantities, and several 800V silicon carbide main drive module projects and European brand Tier 1 targets have been added. The company continues to build a production line with an annual output of 60,000 6-inch automotive-grade SiC MOSFET chips and 300,000 6-inch high-voltage specialty power chips. The project owner, Star Microelectronics, already has some silicon-based medium- and low-voltage products, achieving revenue of 263 million yuan and net profit of 62 million yuan in 23 years. It is expected that the autonomous silicon carbide production line will gradually start in 24 years.
Investment advice: The short-term decline in the price of new energy products was higher than our previous expectations. In the medium to long term, we are optimistic about the company's first-mover advantage overseas and silicon carbide. We expect the company's net profit to be 9.6/10.8/1.23 billion yuan in 24-26 (previous value of 11.1/1.32 billion yuan in 24-25), corresponding to PE 25/22/20 times for 24-26, respectively, maintaining the “buy” rating.
Risk warning: Demand for new energy falls short of expectations, production line construction falls short of expectations, etc.